Thursday, November 16, 2017

Mauritius Lawsuit Accuses Top Indonesian Officials of Laundering Billions

Mauritius Lawsuit Accuses Top Indonesian Officials of Laundering Billions

Billions of US dollars belonging to Indonesian taxpayers have allegedly been spirited out of Indonesia and into bank accounts in Singapore, Lebanon, Russia, Cyprus, the UK and Bermuda by some of the most powerful financial figures in Jakarta with the help of an international cabal of money launderers, according to a lawsuit filed in the Supreme Court of Mauritius on Sept. 29.

Six plaintiffs led by the Mauritius-based closed-end investment company, Weston International Capital Ltd are seeking US$410 million from the Indonesian Deposit Insurance Corporation (LPS) and 12 other J Trust and LPS associated defendants that Weston claims it was defrauded out of three years ago through the sham sale of Indonesia’s Bank Mutiara to a then-unknown Japanese financial concern, J Trust, along with various money laundering, bribery and theft charges.

Weston has chased the money in court cases from Mauritius to Singapore to Switzerland and now to Cyprus and Thailand and claims through a spokesman that it is either nearing collection on monies owed or in the alternative moving for the bankruptcy, liquidation and collapse of J Trust Co. Ltd, J Trust Asia Pte, PT J Trust Investments Indonesia, Group Lease PCL and the Indonesian Deposit Insurance Corporation (LPS) and their shareholders.

Indonesia’s notoriously corrupt courts have traditionally ignored a long list of international creditors attempting to collect in any manner on international legal judgments against Indonesian corporate deadbeats.  However a Weston spokesman contends that “it is time for either the LPS to settle these debts and self-report these charges to global regulators or for the Indonesian banking system to face further intense global anti-money laundering scrutiny and embargos.”

Saga of Bank Century

The Weston lawsuit revolves around the long-running takeover of the remains of a failing Indonesian financial institution previously named Bank Century, which nearly capsized in 2008 during the global financial crisis.

According to a series of Asia Sentinel stories, Indonesian Deposit Insurance Corporation (LPS) officials reportedly were ordered to pour US$830 million at then-prevailing exchange rates into the bank from 2008 to 2013. These capital injections were intended to conceal the fact that the bank’s former owner, Robert Tantular, was allowed by the Indonesian government to steal more than US$500 million of the bailout funds and launder them back out of Indonesia to Singapore, Cyprus, Switzerland, Russia, the USA and Lebanon through the likes of Standard Chartered Bank Singapore, Wells Fargo Bank N.A., Federal Bank of Lebanon and FBME Bank.

The attempt to prop up the bank in 2008 and 2009 nearly brought down the entire Indonesian financial system and led to the ouster on what are widely regarded as trumped-up charges of Sri Mulyani Indrawati, the internationally-respected finance minister in 2016, who quit and joined the World Bank as its managing director. Sri Mulyani’s return as finance minister has led to little progress in correcting the Indonesian banking system’s anti-money laundering concealment program


In 2008, the sinking Bank Century was expropriated by the Indonesian Deposit Insurance Corporation, a quasi-government agency. The bank was renamed Bank Mutiara and sold to J Trust, a Tokyo-based consumer finance company partly owned by and advised by the US activist hedge fund Taiyo Pacific LLP, the California Public Employee Retirement System (CalPERS), Invesco Capital and WL Ross & Co, headed by Wilbur Ross, the current Secretary of Commerce. As Asia Sentinel has reported, J Trust appears to have illicitly paid just US$28.5 million instead of the publicly claimed US$368 million to acquire 99.996 percent of Bank Mutiara, which was later renamed Bank JTrust.

There is little about the Japanese parent, J Trust Co. Ltd, that inspires confidence. Its CEO, Nobuyoshi Fujisawa, was president of several units of Livedoor, a Japanese internet service provider that went belly-up in a 2006 Ponzi scheme amid charges of market manipulation and securities fraud. J Trust is also connected closely to Takefuji Co. Ltd., another notorious Japanese US$5.2 billion pyramid fraud and bankruptcy that ended in its demise in 2010.

It is now affiliated with and announced it intends to take over Group Lease PLC, a Bangkok-based hire purchase lender whose share price has collapsed and whose shares were recently suspended from trading by the Thailand Securities and Exchange Commission and the Stock Exchange of Thailand (SET) because of fraud, corruption and money laundering charges.

Group Lease’s now-departed Chairman and CEO, Mitsuji Konoshita, has been charged by Thai authorities with fraud, theft, statutory audit fraud and money laundering. He has left Thailand ahead of the charges.

J Trust Co.’s stock ownership appears to be intertwined in a maze of cross shareholdings with APF Financial, Showa Holdings Ltd, Wedge Holdings Co., Ltd, Group Lease PCL, PT Bank JTrust Indonesia TBK in addition to Group Lease Holdings Pte Ltd (Singapore), Taiyo Pacific LLP, CalPERS and Invesco. 

Prominent Banker Accused

A leading defendant in the Weston lawsuit is Kartika Wirjoatmodjo, currently president director of PT Bank Mandiri TBK, Indonesia’s biggest bank, which is owned by the Indonesian government. Wirjoatmodjo is one of the country’s most prominent banking officials and is also the sitting chairman of the Indonesian Association of Banks.  In the lawsuit, he is referred to as “the primary architect, orchestrator and director of all of the fraudulent acts of concealment, money laundering and theft committed at Bank JTrust from 2014 until late 2015.”

Other Indonesian government officials named in the lawsuit include Sukoriyanto Saputro, Bank Mandiri’s former corporate secretary, Fauzi Ichsan, the current CEO and Commissioner of the Indonesian Deposit Insurance Corporation, Ahmad Fajar, an LPS appointed, international director and President Director of Bank JTrust Indonesia, now a Bank JTrust Commissioner, and Felix Istyono Hartadi Tiono, Bank JTrust’s chief Money Laundering Compliance Officer (MLCO) since 2014. 

Wirjoatmodjo headed the Indonesian Deposit Insurance Corporation, known under its Indonesian name Lembaga Penjamin Simpanan (LPS), from 2014 to 2015 before taking over as chief executive of Bank Mandiri. He was in charge of the LPS sale of Bank Mutiara to J Trust in 2014 under the explicit directions of the presidential office of Susilo Bambang Yudhoyono according to the suit. He is alleged to have ordered the Indonesian Financial Services Authority’s approval of J Trust Co. and Fujisawa as qualified buyers under “fit and proper test” requirements even though J Trust’s credentials to acquire a bank were considered dubious at best, much less Fujisawa’s.

Finally, several board members of PT Bank JTrust Indonesia TBK and four J Trust Co. and J Trust Asia executives are named in the Weston lawsuit as enjoined individuals, namely Nobuyoshi Fujisawa, Shigeyoshi Asano, Nobiru Adachi and Felix Istyono Hartadi Tiono, a globally registered MLCO.

Enter the Saabs

Among the most tarnished defendants named in the lawsuit are Fadi Michel Saab, Ayoub Farid Michel Saab and Michel Norbert Saab, all officers and owners of the notorious Tanzania-based FBME Bank, FBME Bank’s Cyprus branch, FBME Card Services Ltd. and the Federal Bank of Lebanon, purportedly long a bank of interest to global regulators. FBME Bank was in effect closed down by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) earlier this year.

All of the Saabs are alleged to be the transferors and past recipients of hundreds of millions of dollars of laundered money including over US$400 million missing from the Saab Financial (Jersey/Bermuda) Ltd. offshore vehicles which have acted as the Saabs’ personal piggy bank.

It is alleged that over US$40 million has been paid by the Saabs to their legal advisers since 2014 to conceal their money laundering activities and primarily to US law firms that may face money laundering charges themselves.

The Saabs and Bank JTrust under the ownership of both Tantular and the LPS continued to launder money from 2006 to 2015, according to an explosive report authored by Peter Barrie-Brown, a UK money laundering and compliance expert. It was written for and secretly distributed only to the LPS, J Trust and Bank JTrust in mid-2014 and was concealed until 2016.

Authorities of the US Treasury Financial Crimes Enforcement Network (FinCEN) in effect shut down FBME Bank in April of this year after a three-year battle, citing massive acts of money laundering and aiding and abetting terrorist financing to the likes of Hezbollah and Syrian manufacturers of sarin gas. The Saabs recently lost their final fight before the US Appeals Court in Washington, DC to prevent FBME Banks final closure and liquidation after the government of Tanzania unexpectedly withdrew its support for the appeal on Oct. 3

LPS Sale Process of Bank Mutiara

The sale of Bank Mutiara was allegedly executed under a confidential and conditional share purchase agreement that required a down payment of just US$28.1 million and exclusively provided leveraged buyout debt to J Trust Co. through a Rp3 trillion sharia promissory note issued secretly through the LPS to J Trust which was later written down to zero by the LPS and never paid. Neither J Trust Co. nor the Indonesian Deposit Insurance Corporation have responded adequately to questions from the Asia Sentinel regarding the affair.  

J Trust Co. was thus basically given Bank Mutiara for virtually free using the flailing bank’s cash on hand in exchange for covering its losses, which have run into the tens of millions of dollars. The bank was widely believed in Jakarta to be the repository of vast amounts of slush funds for the Indonesian Democratic Party in 2008 headed by then-President Susilo Bambang Yudhoyono.  

During the discovery process for the LPS sale of the bank, the lawsuit alleges, the 21 collective Weston defendants acted in a conspiracy to “collectively and collusively conceal the existence” of the Barrie-Brown report, which was concealed to over 20 potential bidders throughout 2014 in order to mask the money laundering operations of Bank JTrust that would have rendered the bank unsellable.

Indonesian LPS a Key Player

The lawsuit alleges that the Indonesian Deposit Insurance Corporation “operated as a key functioning member of an Indonesian government kleptocracy and was sanctioned and empowered to conceal and cover up over US$1 billion of fraud, theft, embezzlement and money laundering committed between Bank JTrust, Tantular, Saab family members, Saab Financial Jersey/(Bermuda) Ltd, J Trust and FBME Bank.”

The complaint alleges that officials of the Indonesian government and the LPS government officials in control of Bank JTrust from 2008 to 2015 along with Nobuyoshi Fujisawa, Nobiru Adachi, Bank JTrust’s current president commissioner,  And Felix Istyono Hartadi Tiono, Bank JTrust’s money laundering compliance officer, who are accused of collectively conspiring  to violate global banking and money laundering laws and regulations to the tune of US$410.5 million, with Wirjoatmodjo as the principal architect.

The lawsuit further charges the Saab family members, FBME Ltd, the Federal Bank of Lebanon and FBL executives with a separate US$287.8 million of claims arising from acts of fraud, theft, embezzlement and money laundering.

Weston alleges that the LPS auction was illegal because Bank JTrust, under the orders of Wirjoatmodjo, failed to disclose to its regulators and auditors that FBME Bank and another Saab unit had sued Bank JTrust in the London Court of International Arbitration, alleging fraud and theft and seeking a US$38.5 million return from Bank JTrust of US$40 million in cash already laundered back to Saab Financial Limited (Jersey) by Tantular and Fadi Saab.

The London court claim was never disclosed to the prospective bidders although it should have nullified the possibility of the sale of the bank to various suitors, which also included Bank Rakyat Indonesia and the Bank of China (HK).  The lawsuit alleges Wirjoatmodjo authorized a US$8 million bribe paid to the Saabs to continue the concealment of the money laundering, theft and fraud. The US$8 million was purportedly disbursed to Bank of America London disguised as £5 million of legal expenses credited to Saab Financial Bermuda’s lawyers in London by Bank JTrust.

Mutiara Sale Goes Forward Anyway

Nonetheless, the sale of Bank Mutiara went forward in November 2014. WICL, Weston’s holding company, withdrew from the auction process in June 2014 after reaching the final round of six qualified bidders. Weston claims that Wirjoatmodjo and the LPS were concealing at least US$400 million of financial irregularities at the bank including hidden internal cash deposit disbursements illicit securities illicit transferrals, FBME money laundering, embezzlement, theft, fraud and statutory audit fraud while the Indonesian financial regulators turned a blind eye.

The Weston plaintiffs allege that J Trust Co. and the other LPS defendants led by Wirjoatmodjo also failed to disclose that Tantular and Budi Mulya, then Deputy Governor of Bank Indonesia had been convicted of by the Central Jakarta District Court in 2010 and 2014 and sent to jail for 20 and 14 years respectively for criminal fraud and money laundering. Simultaneously, Wirjoatmodjo was leading the illegal LPS sale of the bank.

The lawsuit alleges that at a secret J Trust Co.  board meeting held on August 14, 2008 – well before the LPS had formally ended the Bank Mutiara sale process, and long before the LPS had disclosed the winner of the auction, the entire J Trust board of directors in Tokyo had already internally approved the purchase of Bank Mutiara with terms never offered to any of the other bidders including over US$340 million of upfront leveraged debt forgiveness.

J Trust Co. “knew with absolute certainty that it was conspiratorially pre-chosen…as the ‘exclusive buyer’ in the non-transparent fixed sale of the shares,” the lawsuit alleges, with a mandate “to hide all of Bank JTrust’s previous and future criminal acts from the public at large to global regulators and criminal authorities.”

Theft Continues

In the wake of the sale, according to the suit, the carnage has continued, with more than US$1.5 billion laundered out of Bank Mutiara, now renamed Bank JTrust, and various J Trust in violation of a US$120 million Supreme Court of Mauritius global Mareva injunction – a court order freezing assets so that J Trust and Bank JTrust defendants couldn’t dissipate them beyond the court’s jurisdiction.   

The money-laundering has continued, according to the suit, partly through a long list of alter ego subsidiary units including J Trust Asia, a Singaporean subsidiary wholly owned by the J Trust parent, that “acts as the base implementation agent” for all of J Trust’s investment and other strategic directives, as well as PT JTrust Investment Indonesia and Group Lease PCL.

As much as US$211 million in cash and other funds is said to have been diverted from J Trust, Bank J Trust and J Trust Asia since May 2016 to Group Lease PCL and Group Lease Holdings Pte (Singapore) in questionable acts of Weston alleged J Trust money transfers ordered by Nobuyoshi Fujisawa, Shigeyoshi Asano and former Group Lease Chairman, Mitsuji Konoshita to related party entities of Group Lease Holdings Pte in Singapore and Cyprus in what appears to be a vanishing act of hundreds of millions of laundered funds to J Trust related parties.

The Thailand Securities and Exchange, with the help of the Cyprus Securities and Exchange Commission, recently accused former Group Lease Chairman and CEO Mitsuji Konoshita  diverting US$54 million purported to be loans to four related party “independent” groups of borrowers in Cyprus and one in Singapore under Konoshita’s ultimate control, according to a Group Lease Independent Auditors Report dated Sept. 30 and released on Nov.14.

The lawsuit claims these funds are in fact owed to Weston and depict a plan between Group Lease, Wedge Holdings, Showa Holdings and various Group Lease and J Trust board members, officers and shareholders led by Fujisawa to defraud J Trust Co. and Bank JTrust creditors, all in violation of the Mauritian Mareva injunctions.

Final Act Near?

“Either the Indonesian LPS respectfully defends Wirjoatmodjo and the other Indonesian LPS and Bank JTrust defendants as well as J Trust associated executives in the Mauritius courts or it chooses to voluntarily self-report billions of US dollars of global money laundering concealment and fraud to international regulators led by the Monetary Authority of Singapore and the US Department of Justice while simultaneously settling  their debts to us in the amount of US$410.5 million and the regulatory fines to global regulators” said the Weston spokesman.

“The last thing the Indonesian government needs right now is to have one of the most senior ranking bank officials in Indonesia admitting under oath to concealing global money laundering, and massive fraud at the LPS and Bank JTrust while Indonesian banks led by Bank Mandiri are looking to dangerously expand their retail depositor global footprint into Singapore and other parts of Asia.”

John Berthelsen

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